Wall St falls sharply - Malaysiakini

NEW YORK - WALL Street fell sharply early on Friday, with the Dow Jones industrials reaching new six-year lows as investors around the world keep selling on pessimism about the global economy.

Financial stocks led the market lower.

Disappointing fourth-quarter earnings reports from Lowe's and JC Penney provided new evidence that the recession is taking a heavy toll on US businesses. The pair also forecast 2009 earnings below analysts' expectations.

The reports came as investors are increasingly worried about the weakening banking industry and what the government is doing to stabilise it.

The Dow tumbled 131.10, or 1.76 per cent, to 7,334.85. On Thursday, the Dow fell to its lowest level since Oct 9, 2002, the depths of the last bear market.

The Standard & Poor's 500 index tumbled 14.05, or 1.80 per cent, Friday to 764.89, while the Nasdaq composite index fell 16.14, or 1.12 per cent, to 1,426.68.

Key financial stocks including Citigroup Inc and Bank of America Corp were falling again after being battered Thursday. Both Citi and Bank of America have been among the hardest hit by the ongoing turmoil in the industry and received multiple multibillion investments from the government to help stabilise their operations.

'There's perceived disappointment from the lack of clarity from the Treasury (Department) for what it will do with the financial sector,' said Wasif Latif, portfolio manager at USAA Investment Management Co. 'That's hitting financials regularly.'

Stocks have fallen steadily over the past two weeks as investors lost confidence in multiple Obama administration programmes aimed at bolstering the economy. The market's inability to rally signals that investors don't have a sense of when the recession, already 14 months old, will end.

'We're going through a tug of war between optimism and pessimism,' Mr Latif said. 'When there is a lack of clarity, it becomes more of an emotional or psychological environment. The mood can sway on any given day based on the flow of news coming out.'

Friday's sell-off followed steep drops overseas. Japan's Nikkei stock average fell 1.87 per cent and Hong Kong's Hang Seng fell 2.49 per cent. In afternoon trading, Britain's FTSE 100 declined 3.09 per cent, Germany's DAX index tumbled 4.08 per cent, and France's CAC-40 fell 3.50 per cent. -- AP